Like many other jurisdictions Minnesota has enacted unclaimed property laws, under which the state assumes control of private property if an account holder fails to protect his rights. For example, if a small business has placed money in a bank account, it may be transferred to the state if the owner fails to interact with the bank for a period of three years. Of course, this shouldn’t be a problem in most cases; however, there are circumstances where this may come up, when money has been set aside for safekeeping.
The good news is that the Minnesota Supreme Court recently handed-down a decision affirming that whenever the state takes interest bearing property, it must return that property with interest. Previously Minnesota would return the principal account upon request, but without any earned interest. Instead, the State had collected interest on seized bank accounts for public use, which we argued violated the Fifth Amendment. But with the Minnesota Supreme Court’s decision in Hall v. State, we’ve established that the Takings Clause ensures meaningful protections against unclaimed property laws—which is important given the trend we’ve seen in some jurisdictions to speed-up the time for the unclaimed property laws to compel transfer of accounts.
More broadly, this decision further demonstrates that the Takings Clause of the Fifth Amendment may constrain and limit application of otherwise confiscatory regulatory regimes. Indeed, one of our institutional goals is to create precedent that may be helpful for small businesses dealing with regulatory appropriations. Traditionally, takings doctrine has been applied almost myopically in review of land use regulation; however, we’ve made strides to press the envelope in invoking the Takings Clause in challenge to restrictions imposed on business—as in Horne v. USDA, where we helped secure a decision that government cannot require farmers to give up a portion of their crop as a condition on the right to sell at market. And we’re currently challenging a regulatory appropriation of private assets in Montana.
Stay tuned for further updates on our work defending free enterprise. And in the interim, check-out our recent post discussing the U.S. Supreme Court’s decision granting certiorari in Knick v. Township of Scott.